Novartis Takes Roche to Court Over $210 Million Licensing Fees

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Novartis recently took Roche to U.S. District Court in California, which then moved to a federal court, over fees from a 16-year-old patent licensing deal. The deal was originally inked in 2005, where U.S.-based Chiron Corp. made payments to Genentech, a Roche company. In 2006, Novartis acquired Chiron for $5.1 billion.

Chiron developed drugs like Ilaris (canakinumab) for inflammatory diseases such as Adult-Onset Still’s disease, Systemic Juvenile Idiopathic Arthritis, and others, and Cosentyx (secukinumab) for plaque psoriasis, psoriatic arthritis, and inflammatory disorders. Ilaris brings in about $900 million annually, while Cosnetyx is Novartis’ best-selling drug with nearly $4 billion in annual sales.

“Novartis subsequently discovered that it mistakenly overpaid,” Novartis attorneys wrote in a heavily redacted filing published June 24 in the U.S. District Court in California. “Genentech was aware or should have been aware that Novartis had overpaid … to Genentech throughout the term of the Agreement. By mistake, Novartis overpaid … to Genentech on its drug products, Ilaris and Cosentyx, to which Genentech was not entitled.”

At the time of Novartis’ acquisition, Chiron’s vaccines business was the rationale for the buyout, although Chiron had a history of manufacturing problems with its entire inventory of flu shots for the U.S. in 2005. The company had three main areas, biopharmaceuticals, vaccines, and blood testing. 

The vaccines and blood testing divisions were combined to create Novartis Vaccines and Diagnostics. Chiron BioPharmaceuticals was merged into Novartis Pharmaceuticals. In 2014, Novartis finished selling its blood transfusion diagnostics unit to Grifols and announced agreements to sell its vaccines unit to GlaxoSmithKline.

In a 2006 statement, Daniel Vasella, then chief executive officer of Novartis, said, “Our plan is to turn around the Chiron vaccines business, which will require investments in R&D and manufacturing to increase quality and capacity.”

Otherwise, yesterday Novartis announced it had appointed Rob Kowalski as Chief People & Organization Officer. He was previously Global Head Regulatory Affairs and U.S. Head of Drug Development. The new role will kick in on September 1, 2021, and he will report to Vas Narasimhan, chief executive officer of Novartis, and become a member of the Executive Committee of Novartis (ECN).

Steven Baert, presently Chief People & Organization Officer, plans to step down from the ECN effective June 30 after 15 years with the company. Vicki Rawlinson, U.S. Head People & Organization, will lead the function ad-interim until Kowalski steps up.

Kowalski is a U.S. citizen who, with the new position, will be based in Basel, Switzerland.

“Rob is a strong business and people leader with a proven track record of building and leading global organizations,” Narasimhan said. “Based on his Novartis business experience and focus on culture and talent development he will help us to scale our culture change and talent agenda, deliver our People & Organization operating model, and help us to further connect human capital decisions with business strategy.”

He went on to say, “I thank Steven for his invaluable contributions as a leader and advisor to the ECN and Board of Directors. He has driven a cultural and organizational transformation that supports our company’s long-term priorities and purpose and makes us an industry leader in human capital. I wish him the very best for his future.”

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